After three Chinese state-backed organizations issued a warning about Bitcoin on social media stating that consumers would have no protection for any losses resulting from cryptocurrency investment transactions, the cryptocurrency dropped to less than $34,000 on Tuesday, reported the BBC. This marks the first time in three months that the cryptocurrency reached such a low level and a big difference from last month when the currency was at $64,000.
The drop follows a decrease of over 10% last week after carmaker Tesla said it would no longer accept Bitcoin as payment for its vehicles. Etheruem and Dogecoin also lost as much as 25% and 29% respectively after Tuesday's news.
The organizations issuing the warnings were the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China. China has been trying to crack down on cryptocurrencies for a while now.
Will western countries follow suit?
Neil Wilson of Markets.com told BBC that "China has for some time been putting pressure on the crypto space, but this marks an intensification — other countries might follow now as central banks make strides towards their own digital currencies. Until now, western regulators have been pretty relaxed about Bitcoin, but this might change soon."
Bitcoin owners be like pic.twitter.com/urHGKEdp93— gee 💵 (@xgee) May 19, 2021
Meanwhile, Coinbase, Binance and other major crypto exchanges were down due to the Bitcoin upheaval, according to The Independent. Online banking apps that offered cryptocurrency trading also reported having issues.
This latest news seems to come out of nowhere as there were reports that Bitcoin remained a healthy investment throughout the pandemic. A group of scientists from the Institute of Nuclear Physics at the Polish Academy of Science (IFJ PAN) in Kraków led by Professor Stanisław Drożdż evaluated the behavior of the cryptocurrency market in response to the economic situation caused by the coronavirus and found it to be stable.
We now go live to Bitcoin pic.twitter.com/uH19tcpNBd— James Felton (@JimMFelton) May 19, 2021
"Due to their virtuality, most potential market participants still perceive cryptocurrencies as quite peculiar items. In times of crisis, during violent economic and political turmoil, people resort to financial resources they consider more reliable. But our comparisons showed that solid instruments recorded drops at the most critical moments, while cryptocurrencies behaved much more stable," said at the time Professor Drożdż.
If you can’t handle #Bitcoin at -50% you sure as hell don’t deserve it at +500%— Ben Kaufman (@_benkaufman) May 19, 2021
Back in April of 2020, it was speculated that Bitcoin could still have a big year, reaching a value of 100K per coin. However, those who ventured a guess that the cryptocurrency could reach such high levels did not take into account China's crackdown or Tesla's change of opinion. These two events happening close together seem to have thwarted the cryptocurrency's continued rise.
Will Bitcoin be able to overcome these obstacles and soar again or have these recent events spelled an ever decreasing path for the cryptocurrency?